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JP Morgan Healthcare Conference, Day 2: Thermo Fisher, PacBio, Qiagen

By Edward Winnick and Tony Fong

SAN FRANCISCO (GenomeWeb News) – The second day of the JP Morgan Conference included presentations from several of molecular tools and molecular diagnostics bellwethers, including Thermo Fisher Scientific and Qiagen, as well as single-molecule sequencing firm Pacific Biosciences.

Below is a recap of their pitches to investors and other issues discussed during their breakout sessions.

Thermo Fisher Scientific

Thermo Fisher Scientific President and CEO Marc Casper said that the company’s focus for the coming year would be on accelerating revenue and earnings growth.

On the revenue front, Thermo Fisher will continue its strategy to increase its presence in Asia-Pacific, and to invest in R&D. Acquisitions that add to shareholder value will also remain part of the strategy, he told investors.

In December, the company announced its plans to buy chromatography firm Dionex for $2.1 billion. Earlier this week, the firm said that the deal has cleared the mandatory, pre-merger waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Commenting on the deal, Casper reiterated that it is expected to result in synergies of $60 million by the third year with $15 million in synergies in the first year of the deal. And in the first 12 months, it is anticipated to add $0.13 to $0.15 to Thermo Fisher’s earnings per share.

In addition to providing Thermo Fisher with added capabilities in the chromatography space, Casper noted that Dionex’s software solutions combined with its own would lead to better margin opportunities. Cross-selling opportunities, such as Dionex’s ion chromatography products, also are anticipated to lead to better pull-through of Thermo Fisher products, he added.

Casper also said that in 2010, Thermo Fisher had become the “largest [mass spectrometer] company in the world,” supplanting AB Sciex, though he did not elaborate.

When the Dionex deal was announced, though, he said that the acquisition could strengthen sales of those instruments by allowing the company greater capability of adding one of its own liquid chromatography systems to its mass spec. Currently, only about half of Thermo Fisher’s mass specs sell with its own LC on the front end.

While government spending remains a concern for the life science industry in general, Casper said that he is hopeful that the funding landscape will play out better than people fear. Funding for the life sciences in the US, the UK, and Japan remain good, he said, as budget cuts have largely spared the sciences, though funding from those governments “will not be super robust growth areas,” Casper said.

Meanwhile, funding from other geographies including Germany and China also looks promising, he said.

Pacific Biosciences

Pacific Biosciences CEO Hugh Martin told investors that the firm remains on track for full commercialization of the PacBio RS system in the first half of this year. The single-molecule, real-time sequencing system is currently in the hands of the firm's early-access users, and Martin said the firm is focusing on four initiatives for the first half of this year: optimizing the chemistry and software; verifying and validating the final feature set; upgrading the beta systems; and launching the system.

Though PacBio officials did not name the early-access customers, it said that customers who have placed orders for commercial instruments include genome centers, academic centers, agricultural companies, and service providers. Several companies have disclosed their purchase orders, such as Monsanto, which is also a PacBio investor, as well as service providers Expression Analysis and GATC Biotech

Martin said that most of the demand for the system is coming from cancer researchers and the ag-bio industry. He noted that the National Cancer Institute has taken an interest in the platform and intends on looking at research programs based on read length.

According to Martin, the firm is assembling final systems now for testing. He said that internally the system is generating read lengths of 1,000 bases or greater. In addition, bugs that have been reported in the software are being fixed in preparation for launch.

Martin said the PacBio RS will roll out with 99.99 percent accuracy, but noted that internally the firm has achieved 99.9999 percent accuracy. The system also is currently running at 25-30 fold coverage, but Martin expects the firm will be able to eventually lower that.

The PacBio RS has a list price of $695,000, which the firm views is its "entry point" into the market. "Over time, there is no reason why we can't build an instrument that costs $50,000, $100,000, $300,000, so we have got a tremendous portfolio opportunity ahead of us over time," said Martin.

PacBio also plans to eventually develop tools for kinetic detection to run on the system. That's not part of the initial launch, but Martin said customers are developing apps for that on their own.


Qiagen, which has been known in the past for its aggressive acquisition strategy, was "very mute" in 2010, according to CEO Peer Schatz. But he believes 2011 will be "more interesting."

Indeed, the firm announced Tuesday that it has acquired a stake in Alacris Theranostics, a German startup using whole-genome sequence analysis to develop individualized cancer therapies.

Alacris, which was founded by researchers at the Max Planck Institute for Molecular Genetics and Harvard Medical School, uses a proprietary modeling system called ModCell that was developed at MPI-MG to analyze clinical sample data based on next-generation sequencing and other whole-genome sequencing technologies. According to Schatz, the power of the technology is in the bioinformatics component that will enable development of the assays from complex content.

With much of his presentation dedicated to molecular diagnostics, Schatz noted that Qiagen launched and CE Marked its QIAsymphony platform just a few months ago. It launched in Europe with an initial menu of 14 assays, both regulated and laboratory-developed tests, and according to Schatz, the firm has already sold hundreds of the systems.

The company also inked a deal with Abbott in October to develop a quantitative hepatitis C test, which will be optimized and labeled for use on Qiagen's QIAsymphony RGQ instrument and marketed under the Abbott name in the US and Canada. Qiagen also has a "broad pipeline" of assays planned for its QIAsymphony and QIAensemble platforms for launch in the US, Europe, and elsewhere in 2011 through 2013.

In response to a question about potential competition from Gen-Probe's new Panther molecular diagnostics system, Schatz said QIAsymphony offers greater flexibility for medium-throughput labs.

Also on the molecular diagnostics front, Schatz said the firm would launch its portable, battery-operated point-of-need system later this year. He introduced the platform at the JP Morgan Healthcare Conference a year ago, but the firm has not launched it yet. Schatz noted that one area in which the system could be used is for disease screening programs in emerging markets.

Currently, molecular diagnostics account for around 60 percent of Qiagen's business, or $700 million in sales.

Schatz also noted that the firm's companion diagnostics initiatives continue to grow, with more than 20 projects with pharmaceutical firms underway.

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